Innovation “front of mind” for family firms: Deloitte

Innovation is “front of mind” for family businesses, according to Deloitte Private, which has highlighted the increasingly crucial role of the sector as part of a federal parliamentary inquiry.

The Coalition is urging family businesses to have their say as part of the inquiry, as calls mount for changes to laws regarding family-owned companies.

Recommended changes include establishing a family business minister, a change to the tax code affecting employee share schemes, and an easier way to transfer businesses between generations.

More than 25 businesses, including Deloitte Private, and organisations have made submissions to the Parliamentary Joint Committee on Corporations and Financial Services.

Deloitte Private highlighted the innovative nature of family businesses.

“Innovation in new products and services, business models, technologies and supply chain management are front of mind for family businesses,” it said in its submission.

“Family businesses also focus on their ability to implement innovative customer-centric strategies, rather than competing and seeking to gain market share through strategies purely focused on purchasing power and price.”

According to Deloitte Private, 70% of Australian businesses identify themselves as family businesses, so the success of the sector is vital to the Australian economy.

In a public hearing of the inquiry, Deloitte Private national managing partner David Hill applauded the intent of the government to treat family businesses as a separate business segment.

“Sometimes family business can be a little bit more cautious and conservative, and therefore efforts to continue to sponsor and support innovation and commercialisation would be very welcome,” Hill said.

Hill made several key recommendations around family businesses, including succession.

“We believe any efforts from the government to support education and assist family businesses and intergenerational wealth transfer would be very important. Training is key,” he said.

“Reducing compliance costs, particularly when it comes to growth and family businesses moving across state borders, we think is very important.”

“And clearly there are two other key points. Finance, both in terms of debt capital and equity capital, is very difficult for family businesses.”

“And the taxation of this sector is a very public issue. It is a much vexed and discussed issue.”

Shadow small business minister Bruce Billson has urged family businesses to support the inquiry by making submissions, which must be lodged by November 30.

“While family businesses have many advantages and a proven record of success, challenges exist such as when the dining room table becomes the boardroom table, and family structures morph into business structures,” Billson said in a statement.

“I urge family businesses across the country to share their insights and experiences with the inquiry no matter how big or small they think their problems are.”

StartupSmart

A free and small business advice website with a variant online start-up business community, whether you are looking for a business mentor or business ideas, StartupSmart will help you in starting a business the smart way.